China's debt reaches 300% of GDP, now 15% of the world total: IIF

A key indicator of China's debt has exceeded 300% of gross domestic product According to the Institute of International Finance (IIF), as Beijing increases support for the cooling economy while trying to contain financial risks.

China's total corporate, domestic and government debt rose to 303% of GDP in the first quarter of 2019, from 297% in the same period a year earlier, the IIF said in a report this week highlighting rising debt levels around the world.

The IIF is a global private association of the financial industry, based in Washington.

While the efforts of the authorities to curb hidden bank loans (especially to smaller companies) have led to a cut in non-financial corporate debt, net borrowing in other sectors has led to China's total debt to more than $ 40 billion, approximately 15% of the total world debt, said the report.

It is noteworthy that the issue of bonds on land suggests a large recovery in loans from local governments and banks this year.

China's economic growth slowed to 6.2% in the second quarter, its weakest pace in at least 27 years, as demand in the country and abroad faltered in the face of increasing US trade pressure.

To revive investment and protect jobs, Beijing has encouraged banks to lend more, particularly to smaller companies that are struggling. It also revealed billions of dollars in tax cuts and infrastructure expenses.

In the first half of this year, the total net issuance of local government bonds reached 2.1765 trillion yuan ($ 316.5 billion), the Ministry of Finance said on Tuesday.

Chinese officials have repeatedly said that the risks of the debt are generally manageable.

(Report of Asia Economics and Markets Desk, edited by Richard Borsuk)